Business

Labour market recovery ‘constrained by availability of workers’

The latest labour market data has highlighted the recruitment challenges for employers.
The latest labour market data has highlighted the recruitment challenges for employers. The latest labour market data has highlighted the recruitment challenges for employers.

THE north’s official unemployment rate has dropped to a near record low amid repeated reports that employers are struggling to fill vacancies from the current labour stock.

The latest labour market report from the Northern Ireland Statistics and Research Agency (Nisra) showed unemployment at 2.5 per cent for the three months to February, closing on the record 2.3 per cent from the outside of the pandemic.

The number of people paid through HMRC’s PAYE system hit another all-time high of 775,000 in March, the tenth consecutive month the total has exceeded pre-covid levels.

In contrast to last year’s widespread fears of mass redundancies ahead of the closure of the furlough scheme, employers are now consistently reporting their struggles finding skilled workers to fill vacancies.

A survey published by NI Chamber last week showed nine-in-ten employers reporting challenges with recruitment in early 2022.

Nisra’s latest data release shows the total employment rate in Northern Ireland stands at 71.2 per cent, which is still below the pre-pandemic peak of 72.6 per cent.

That’s partly due to the decline in self-employment during the Covid-19 pandemic, which remains 25 per cent down from where it stood in early 2020.

But there has also been a drop in the number of people classed as economically inactive looking for employment.

Mark Magill of the Ulster University Economic Policy Centre said the percentage of economically inactive people in the north who ‘want to work’ has fallen back to 14.5 per cent, the worst rate since 2010, “highlighting the difficult challenge of tackling labour shortages with NI's existing labour stock”.

He said the pace of the labour market recovery has been constrained by the availability of workers.

Ulster Bank’s chief economist Richard Ramsey said the supply of labour from overseas “has been stymied to a large extent by Brexit”.

He said the labour market data points to an “extremely limited supply” of local workers.

“Attracting workers from the Republic of Ireland and Great Britain is another option but they too are experiencing record vacancies.”

The economist said the ongoing cost crisis will incentivise workers to switch jobs to secure higher salaries.

“This makes it challenging for employers who will be increasingly under pressure to pay more to retain staff as well as attract new talent.

“For employers, both the unemployment and inflation rates are moving in the wrong direction.”